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Bio-Rad Sees Growth Trajectory for Droplet Digital PCR Despite Soft Q3 Life Science Segment Results

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Bio-Rad Laboratories said last week that sales in its Life Science segment, which contains the company's PCR and digital PCR products, dropped 3 percent year over year and 1 percent on a currency-neutral basis.

Bio-Rad attributed the drop to continued slowness in the research spending environment, and noted that results were positively impacted by sales of antibodies and reagents from its January acquisition of AbD Serotec, as well as sales of biochromatography and cell-sorting instruments.

And while the company did not break out sales figures for its PCR or digital PCR products, executives noted that the business — especially the QX100 and QX200 Droplet Digital PCR platform — remains on a growth trajectory.

Separately last week, scientists from the company published a peer-reviewed study detailing how the dye chemistry capabilities of its recently launched QX200 system can enable multiplexed target detection in a single reaction.

For the three months ended Sept. 30, Bio-Rad's Life Sciences segment reported revenues of $162.9 million compared to $167 million in the comparable quarter last year.

"Sales of our life science products continued to be hampered by constraints in the global academic and government spending environment, partially offset by good demand for our new cell-sorting and chromatography instruments and the acquired antibody business," CFO Christine Tsingos said during a conference call last week recapping the Q3 results.

"Despite the success of our new products, organic currency-neutral growth for Life Science declined 4.4 percent for the quarter, reflecting flat to down sales in nearly all regions," Tsingos added. "It is also worth mentioning that our recent Life Science sales performance has also been tempered by changes we are currently making in our distribution network in China, which should better position us for growth in the future."

When asked by an analyst what proportion of the Life Science business is exposed to China, Tsingos remarked that the company does not break its numbers out to that level of detail.

However, Brad Crutchfield, executive vice president of the Life Science group, offered up a few more details on the segment's performance.

"In general, Europe is stabilizing for us," Crutchfield said. "The US continues to suffer from sequestration. We didn't see any impact of the government shutdown in the third quarter, because that obviously happened after [the end of Q3]. But we really did see some changes [and] shortfalls in China, and … we're moving … from large distributors to a [closer and] smaller distributor model. That's certainly had an impact, but that's all consistent with us putting it in a better position in the future."

During Q3, Bio-Rad launched the QX200 Droplet Digital PCR system, the next-generation of the QX100 system. The company designed the new platform to work with both EvaGreen fluorescent DNA dyes and TaqMan hydrolysis probes, providing users with greater flexibility in designing their digital PCR experiments (PCR Insider 8/1/2013).

To wit, scientists from the company published a paper last week in Analytical Chemistry detailing this upgrade and some of the applications that it will enable, and offering a side-by-side comparison with traditional TaqMan hydrolysis probes.

"By partitioning each sample prior to thermal cycling, we demonstrate that it is now possible to use a DNA-binding dye for the quantification of multiple target species from a single reaction," the researchers noted in the paper. "The increased resolution associated with partitioning also made it possible to visualize and account for signals arising from non-specific amplification products. We expect that the ability to combine the precision of ddPCR with both DNA-binding dye and TaqMan probe detection chemistries will further enable the research community to answer complex and diverse genetic questions."

However, Bio-Rad is also for the first time experiencing significant competitive pressure from other vendors, as both RainDance Technologies and Life Technologies have in the last year commercially launched new digital PCR systems (PCR Insider 1/17/2013 and 6/13/2013). Although both systems technically compete with the QX100 and QX200 platforms, the RainDance RainDrop system is perhaps the most pertinent rival because it also features droplet-based chemistry.

Despite these new competitors, "in general, we didn't see a lot in significant changes in competitiveness of the products," Crutchfield said during the earnings call. "In fact, we have a pretty strong order pipeline. We did have some timing issues as we switched over from the QX100 to the QX200, so some of those sales, which we could have enjoyed in the third quarter, will slip into the fourth quarter."

Crutchfield did concede that early in the year the fresh competition "kind of slowed things initially as people stopped to look at … those products. But the trajectory of our business going forward is accelerating. We do have … good visibility into the fourth quarter. And we're doing quite well. This is a market that's now kind of hitting its stride. I think the applications that are being published, the number of papers, have really expanded the use, as we kind of predicted far beyond our own imagination … in some really exciting areas. We're really excited about this opportunity and the future."

A recap of Bio-Rad's full Q3 financial results can be found here.

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